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Coal

The dragline at Black Thunder coal mine near Wright is seen through heavy fog in March 2017. Demand for Powder River Basin coal may be dropping faster that previously anticipated. 

When Wyoming’s coal industry busted in 2015, we thought we’d seen the worst of things. We wondered if the golden years of coal were behind us, but the “new normal” seemed manageable. A steadily declining demand for coal seemed likely, but it felt like there was plenty of time to address the eventual loss of revenue as coal production dwindled.

In the meantime, the nation elected the most coal-friendly president in recent history. Under President Trump, we’ve seen regulation overturned and energy development made a priority across the U.S.

But despite that, things do not look particularly positive for the coal industry. And this week we learned that steady, manageable decline may actually be much more drastic and unstable than we expected.

Just look at the Powder River Basin, the heart of Wyoming’s coal industry.

Cloud Peak Energy, one of the biggest players in Wyoming and the only publicly traded coal company in the Powder River Basin to escape the 2015 downturn unscathed, is facing bankruptcy. Just last month, the company was suspended from trading on the New York Stock Exchange after prices bottomed out at just 16 cents per share. Cloud Peak’s two mines in Wyoming – Antelope and Cordero Rojo – employ nearly 20 percent of the full-time miners working in the PRB.

Blackjewel, a newcomer to Wyoming coal, owns two mines in the PRB that are uneconomic. Eagle Butte and Belle Ayr mines have increased production but appear to be either breaking even or selling at a loss. And Blackjewel failed to pay more than $8 million in taxes in Campbell County.

To make matters worse, coal plants have shut down in record numbers these last few years. And Wyoming producers depend on a significant chunk of the still-operational coal plants in the nation to buy their coal.

There are 13,000 coal-dependent jobs in the Powder River Basin. As coal plants go offline and coal mines shutter or sell to the highest bidder, it’s these jobs that are on the line. And because state and local economies rely so heavily on this revenue, it’s not just these 13,000 livelihoods that will be affected. The school system throughout the state has already felt the devastating effects of mineral revenue losses, and local governments have cut spending and services to get by.

Meanwhile, natural gas prices remain low and renewable energy industries, like wind and solar, have continued to grow, eating into the nationwide market for Wyoming coal.

Recent projections estimate that the demand for Powder River Basin coal could fall to just 175 million tons, a far cry from the over 400 million tons produced during the basin’s heyday. In the right economic conditions, some analysts predict that number could be even worse.

It’s clear that the outlook is dire. And while the signs have been there for a while, Wyoming’s leaders have done little to pivot our state’s economy away from this volatile industry. But there’s no more time. The fallout from the inevitable bust, one that could be far worse than that of 2015 – and come far sooner than previously expected — would be widespread and devastating to the entire state.

Some say if we want to know what our future could hold, we just need to look to Appalachia, where entire communities went belly up decades ago through similar circumstances and still haven’t recovered.

But we can avoid that fate, if lawmakers act now. There are solutions to Wyoming’s impending woes, and we’re in the position now to act on them. Before our economic situation takes a turn for the worse, we need to take significant steps to reduce our dependency on the price of fossil fuels. This means two things – first, we have to restructure the tax system so that mineral companies aren’t responsible for the lion’s share of state revenue. And then we have to work to diversify the economy so that a sudden downturn in the already fragile minerals markets wouldn’t make all our decisions for us.

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